You peaked my curiousity Mike, so I decided to spend too much time and do another test.
The first image is a section of your original image enlarged to 1600% and saved as a jpg at maximum quality. In the second, I began from the first image, and drew a T, pixel by pixel, each time saving it as a jpg at maximum quality. There's hardly any image degradation, just a very slight color change of some of the pixels.
The third image began as the first, but saved as low quality -obvious deterioration. The fourth began from the third, and drew a T in the same location as in image two, pixel by pixel, each time saving it as a jpg at low quality. Again more deterioration.
Images one and two are much closer than I would have suspected. It may be hard to see, but if you look at the top row, fifth and sixth pixels from the right, you'll see a color change.
I guess the upshot is that jpgs, at max quality, are certainly fine to paint from!
Ok, back to work!
Holly